I saw an argument not long ago that the revolving door ensures more rigorous review of the regulated company.
Basically, domain experts are hired out of a regulatory agency if they demonstrate their domain expertise by being a competent regulator. Would you want to hire someone who didn't do their job well? Also, the 'toughest' regulators are the ones who the companies don't want in their jobs anymore - they'd rather those people were on the other side of the fence, so they hire them.
The people who are soft (or incompetent) are useful in their role, so are left alone, not hired out.
Not sure this is actually true, but the incentive arguments seem like they run in the right direction.
This may not apply to patents as much as other regulatory agencies due to the way patents are argued (Not in court)?
Maybe they cover these arguments in the paper... I just read the abstract and didn't pay to get the whole thing.
Former British chancellor George Osborne passed a bunch of pension deregulation - then was hired by investment management company BlackRock being paid £650,000 ($859,000) a year to work 1 day a week [1].
IMHO this fits better with the "deferred compensation" model of regulatory capture than it does with the one you outlined.
If I worked for a regulator and wanted to maximize my revolving-door compensation, then I'm not sure whether I'd want to be harsh or lenient. As you say, there are forces in both directions. I'd probably aim for the middle of the pack, since I (a) don't want to make my future employer hate me, and (b) also don't want them to think I'm an idiot lackey more valuable to them in government than on their payroll.
But, I think I have a pretty straightforward incentive to create maximum procedural complexity--that is, to draft and enforce regulations that require lots of administrative effort to comply with, but in the end have little economic effect beyond the legal fees. If I'm really clever, then I might even get whoever thought regulation was needed to perceive the paperwork burden as satisfying that--so the company might not even mind the legal fees, if they get an offsetting PR benefit from the procedurally strict (but substantively meaningless) rules. This is the legal equivalent of a computer programmer's job security through poorly-documented code, just with the creation and maintenance phases split across two different employers.
A lot of what patent attorneys do sure feels like it meets that description. If the regulatory capture mentioned in the paper exists, then I'd guess it works more through that procedural complexity than through substance.
There is also a major confounding factor: many people come from industry to begin with, and want to become regulators because they think that light regulation will benefit the industry and the public.
Imagine there was a privacy regulator. Do you think all the folks on HN cringing about GPDR now, would, if they found themselves working at said regulator, act to regulate the tech industry aggressively? Or would they regulate lightly, out of the belief that big-data supported companies are beneficial to the public?
Would I want to hire someone who didn't do their job well? Absolutely, if their incompetence was incompetence in my favor, which is something I'd want to reward. Alternately, if hiring them off freed up an opening for a friendlier regulator, I'd hire them that way too.
Kind of like how donating to the political campaigns of the longest-lasting, most honorable, and least corruptible judges in your local area will ensure they'll always recuse themselves in litigation you find yourself involved in.
To appear balanced, patent examiners must feel more than a little pressure to come down hard on the little guy.
Given the mountains of conflicting evidence with the recent financial crisis that has cost trillions and the crisis before that this argument seems to be baseless.
The linked paper itself goes into some detail to explore alternative explanations in good faith before confirming something of the opposite.
The idea that a revolving door does not have deep ethical implications with massive conflict of interest can be made in good faith only in an 'idealized' world, in which case everything is moot.
Anywhere power is consolidated is going to be targeted for corrupt purposes. Around 50 people on the Congressional budget committees are effectively in charge of trillions of dollars of spending by the federal government, making it easy to bribe and get in your pork spending. Most startups would be far better off making a few donations to some politicians and getting fat government contracts rather than making a great product.
Just look at Amazon and their billion dollar federal cloud contracts. Politicians sell themselves cheap, the ROI is fantastic, probably the best growth hack out there.
Logical conclusion is to limit the size and power of the government to limit consolidation of power and thus make corruption less worthwhile/viable. The founding fathers understood this and that's why they essentially limited the federal government to only managing national defense and left the rest to the states, if you didn't like what your state was doing you could vote with your feet.
I would be interested to see a patent/intellectual property system that was incorporated into a market for licensing. Taxes would be levied on the market value. You would pay taxes based on the royalties collected in the open market, or you could release intellectual property into the public domain.
I'd like to see something like this too, but the tax is based on bonafide offers to license the patent rather than actual licensing revenue. You don't want me to make my cool gadget that infringes on your patent? Ok, fine, but if I register an offer to you for a million dollars for a license, and you turn me down, you have to pay say, 10% as a tax. You're a small independent inventor/patent troll? Either pony up for the government keeping everyone else off your turf, or take the money and move on.
The biggest concern I would have with this is that patents exist in large part to fund very long development times, refining ideas (such as Xerox.) All in advance of production and therefore licensing or revenues from licensing. If you can interest anyone. In the case of Xerox, innumerable companies turned the invention down. A predecessor company of Xerox was willing to heavily knowing the returns would be spectacular if they were right.
To work, the market created would have to avoid collusion (which is rife now and extremely hard to detect or prosecute) and taxes could not be confiscatory (which would be extremely tempting - it's already the case that the filing fee tax is so high that poor people can't afford to patent their ideas, those ideas are given to the first company to copy the idea, swear it's theirs, and file. This may be the major source of economic inequality in the U.S. now.)
Licensing revenue would probably be taxed as corporate income. Also, maintenance fees increase as the years go by, so it only makes economic sense to keep paying fees for valuable patents.
The patent examiners don't have to wait till they leave to work for corporate. Many of them already have full time jobs and do patent examination as their side job. Their only requirement is to recuse themselves from patents filed by their company or their friends.
I'll bet it's pretty easy for two companies to make a deal to pay bonuses to each other's employees when patents are granted.
Please confirm that these people are federal employees who work for the United States Patent and Trademark Office with the title of Patent Examiner. I and some other commenters here are concerned that you may be mistaken.
1) Granting a patent doesn’t necessarily mean that the examiner is more lenient or that the applicant got something good. There are good patents and bad ones, strong ones and weak ones. A high allowance rate may be an indication of very narrow patents which pad corporate quarterly numbers, but don’t have very much significance as patents.
2) This high volume, low value patent prosecution strategy is often seen in large corporate files, the same ones who hire patent attorneys.
3)Examiners deal with an attorney who is usually employed by some independent law firm. The underlying client is often not in direct contact with the patent office at all.
4) those large corporate filers are often in a technology niche. Particular pharma drugs, certain high tech niches like display tech or semiconductor fab, etc. The point is, these are small worlds, and if someone has the background to examine that kind of patent, they are probably in a very small group of people qualified to work on that technology. If they then get a law degree and go into private practice, there’s a good chance they cross paths with an entity that they examined patents of. In some of these tech areas there may be only a few dozen people in total (notionwide) who are qualified in the tech and are in the patent law field, it’s a small world.
5) All the same goes for law firms, there just aren’t that many people in this business, it’s not unlikely to cross paths.
6) bad patents aren’t good. Let me explain. If you’re a patent prosecutor worth your salt, you want a thorough examination. The last thing you want is to have a portfolio of patents which fall apart in IPR. It makes you look really really bad to your clients. hypothetically bribing an examiner is a fools errand, not just in a moral sense, but it’s literally a bad position to be in to get a bunch of bogus patents. Nobody wants that, it’s actually bad.
7) measuring patent quality in terms of citation is a red herring. First, some patents may have a different ‘lifespan’ to when they’re relevant. Some may be immediately cited a bunch, others may linger for a few years before being suddenly relevant due to some other development. But most of all, remember that patents cited on the front page of a patent are largely from the applicant themselves, cited in an IDS. So if a large portfolio starts citing a certain document, it might get cited in 10’s or 100’s of other cases that are somewhat related. And if you’re going to use it as a measure of low quality, that just bolsters my original argument that these would mostly be very narrow patents, a type of low quality but not the type that the public should care about. Shareholders, yes, as it’s a waste of corporate resources. Not anyone else.
The parent, while very informative, doesn't seem to address the actual issue:
What is an alternate hypothesis for a strong correlation between A) volume of patents granted by the examiner, and B) applicant hiring that patent examiner & applicant hiring the same year as the grant of patent?
Whenever I've tussled with domain experts in patents here on HN, I receive these messages from them:
1) Patents are the way they are, because it's a finely honed machine.
2) You're an ignorant rube.
Perhaps that's true. On the other hand, what patents say often seems to contradict common sense. It makes me wonder if the whole field isn't ideologically subsumed.
The whole field is about being absolutely precise with language, in writing and reading. It’s tough to do in English, the language just wasn’t built for it. So patent practitioners have sort of developed a way of being precise with a malleable langauage. Much of the really odd stuff can be understood through that lens. Note, that precise doesn’t mean “clear” or “easy to understand,” something may be precisely broad in just the way intended, while being precisely clear and narrow in other ways. That’s another inpedence mismatch between normal humans and patent people.
Regulation puts you between a rock and a hard place: regulators are either people without industry experience who don't understand the relevant dynamics (e.g. GDPR, SESTA, SOPA) or people with industry experience who have incentives or predispositions towards favoring the industry.
The best solution to that is simply to regulate as little as necessary, and leave as much up to the market as possible. A good example is infrastructure and utility deregulation in the U.S. and western Europe in the 1980s-1990s. There was a time when government regulators would set, e.g. prices for electricity. Today, electric markets are mostly deregulated, with only distribution utilities remaining as regulated monopolies.
> Are there any decent plausible solutions to the problem of regulatory capture?
It would be interesting to see research on various solutions around the world. One obvious solution is paying people market rates for their work; then they don't have an incentive to work in industry. One way government has done that is by providing job security and regular hours as a perk to compensate for lower pay.
In the U.S., the Republican Party (I'm not saying it to be partisan; it's just fact) had been trying to cut pay, cut job security, and also cut personnel, which increases the workload. It's not hard to see where that might lead.
[+] [-] natosaichek|7 years ago|reply
Not sure this is actually true, but the incentive arguments seem like they run in the right direction.
This may not apply to patents as much as other regulatory agencies due to the way patents are argued (Not in court)? Maybe they cover these arguments in the paper... I just read the abstract and didn't pay to get the whole thing.
[+] [-] michaelt|7 years ago|reply
IMHO this fits better with the "deferred compensation" model of regulatory capture than it does with the one you outlined.
[1] https://www.google.com/search?q=George+Osborne+BlackRock
[+] [-] tripletao|7 years ago|reply
But, I think I have a pretty straightforward incentive to create maximum procedural complexity--that is, to draft and enforce regulations that require lots of administrative effort to comply with, but in the end have little economic effect beyond the legal fees. If I'm really clever, then I might even get whoever thought regulation was needed to perceive the paperwork burden as satisfying that--so the company might not even mind the legal fees, if they get an offsetting PR benefit from the procedurally strict (but substantively meaningless) rules. This is the legal equivalent of a computer programmer's job security through poorly-documented code, just with the creation and maintenance phases split across two different employers.
A lot of what patent attorneys do sure feels like it meets that description. If the regulatory capture mentioned in the paper exists, then I'd guess it works more through that procedural complexity than through substance.
[+] [-] rayiner|7 years ago|reply
Imagine there was a privacy regulator. Do you think all the folks on HN cringing about GPDR now, would, if they found themselves working at said regulator, act to regulate the tech industry aggressively? Or would they regulate lightly, out of the belief that big-data supported companies are beneficial to the public?
[+] [-] mchannon|7 years ago|reply
Kind of like how donating to the political campaigns of the longest-lasting, most honorable, and least corruptible judges in your local area will ensure they'll always recuse themselves in litigation you find yourself involved in.
To appear balanced, patent examiners must feel more than a little pressure to come down hard on the little guy.
[+] [-] throw2016|7 years ago|reply
The linked paper itself goes into some detail to explore alternative explanations in good faith before confirming something of the opposite.
The idea that a revolving door does not have deep ethical implications with massive conflict of interest can be made in good faith only in an 'idealized' world, in which case everything is moot.
[+] [-] PeterStuer|7 years ago|reply
[+] [-] galieos_ghost|7 years ago|reply
Just look at Amazon and their billion dollar federal cloud contracts. Politicians sell themselves cheap, the ROI is fantastic, probably the best growth hack out there.
Logical conclusion is to limit the size and power of the government to limit consolidation of power and thus make corruption less worthwhile/viable. The founding fathers understood this and that's why they essentially limited the federal government to only managing national defense and left the rest to the states, if you didn't like what your state was doing you could vote with your feet.
[+] [-] tcbawo|7 years ago|reply
[+] [-] cameldrv|7 years ago|reply
[+] [-] Nomentatus|7 years ago|reply
To work, the market created would have to avoid collusion (which is rife now and extremely hard to detect or prosecute) and taxes could not be confiscatory (which would be extremely tempting - it's already the case that the filing fee tax is so high that poor people can't afford to patent their ideas, those ideas are given to the first company to copy the idea, swear it's theirs, and file. This may be the major source of economic inequality in the U.S. now.)
[+] [-] patentatt|7 years ago|reply
[+] [-] ABCLAW|7 years ago|reply
I can find funding to make it happen, but I can't find a single senior counsel who's interested in advising.
[+] [-] jedberg|7 years ago|reply
I'll bet it's pretty easy for two companies to make a deal to pay bonuses to each other's employees when patents are granted.
[+] [-] fern12|7 years ago|reply
With regard to the moonlighting patent examiners, I'm fairly certain this is illegal. See MPEP 309 and MPEP 1702.
https://www.uspto.gov/web/offices/pac/mpep/s309.html#d0e1919... https://www.uspto.gov/web/offices/pac/mpep/s1702.html
[+] [-] patentatt|7 years ago|reply
[+] [-] josaka|7 years ago|reply
[+] [-] patentatt|7 years ago|reply
1) Granting a patent doesn’t necessarily mean that the examiner is more lenient or that the applicant got something good. There are good patents and bad ones, strong ones and weak ones. A high allowance rate may be an indication of very narrow patents which pad corporate quarterly numbers, but don’t have very much significance as patents.
2) This high volume, low value patent prosecution strategy is often seen in large corporate files, the same ones who hire patent attorneys.
3)Examiners deal with an attorney who is usually employed by some independent law firm. The underlying client is often not in direct contact with the patent office at all.
4) those large corporate filers are often in a technology niche. Particular pharma drugs, certain high tech niches like display tech or semiconductor fab, etc. The point is, these are small worlds, and if someone has the background to examine that kind of patent, they are probably in a very small group of people qualified to work on that technology. If they then get a law degree and go into private practice, there’s a good chance they cross paths with an entity that they examined patents of. In some of these tech areas there may be only a few dozen people in total (notionwide) who are qualified in the tech and are in the patent law field, it’s a small world.
5) All the same goes for law firms, there just aren’t that many people in this business, it’s not unlikely to cross paths.
6) bad patents aren’t good. Let me explain. If you’re a patent prosecutor worth your salt, you want a thorough examination. The last thing you want is to have a portfolio of patents which fall apart in IPR. It makes you look really really bad to your clients. hypothetically bribing an examiner is a fools errand, not just in a moral sense, but it’s literally a bad position to be in to get a bunch of bogus patents. Nobody wants that, it’s actually bad.
7) measuring patent quality in terms of citation is a red herring. First, some patents may have a different ‘lifespan’ to when they’re relevant. Some may be immediately cited a bunch, others may linger for a few years before being suddenly relevant due to some other development. But most of all, remember that patents cited on the front page of a patent are largely from the applicant themselves, cited in an IDS. So if a large portfolio starts citing a certain document, it might get cited in 10’s or 100’s of other cases that are somewhat related. And if you’re going to use it as a measure of low quality, that just bolsters my original argument that these would mostly be very narrow patents, a type of low quality but not the type that the public should care about. Shareholders, yes, as it’s a waste of corporate resources. Not anyone else.
[+] [-] forapurpose|7 years ago|reply
What is an alternate hypothesis for a strong correlation between A) volume of patents granted by the examiner, and B) applicant hiring that patent examiner & applicant hiring the same year as the grant of patent?
[+] [-] stcredzero|7 years ago|reply
1) Patents are the way they are, because it's a finely honed machine.
2) You're an ignorant rube.
Perhaps that's true. On the other hand, what patents say often seems to contradict common sense. It makes me wonder if the whole field isn't ideologically subsumed.
[+] [-] patentatt|7 years ago|reply
[+] [-] custos|7 years ago|reply
Are there any laws restricting companies from "lobbying" regulators or engaging in quid pro quo?
[+] [-] rayiner|7 years ago|reply
The best solution to that is simply to regulate as little as necessary, and leave as much up to the market as possible. A good example is infrastructure and utility deregulation in the U.S. and western Europe in the 1980s-1990s. There was a time when government regulators would set, e.g. prices for electricity. Today, electric markets are mostly deregulated, with only distribution utilities remaining as regulated monopolies.
[+] [-] forapurpose|7 years ago|reply
It would be interesting to see research on various solutions around the world. One obvious solution is paying people market rates for their work; then they don't have an incentive to work in industry. One way government has done that is by providing job security and regular hours as a perk to compensate for lower pay.
In the U.S., the Republican Party (I'm not saying it to be partisan; it's just fact) had been trying to cut pay, cut job security, and also cut personnel, which increases the workload. It's not hard to see where that might lead.
[+] [-] alex_anglin|7 years ago|reply
On the downside - restrict employment opportunities for X years after being in a specific position.
Clearly both have issues, but regulatory capture is a problem worth solving.